How We're Doing: Aging, disability boost Social Security rolls

Feb. 13, 2013

awoolf

Written by

Art Woolf

Half of all Vermonters are over the age of 41, which makes us the second-oldest state in the nation. (No, Florida is not the oldest. That distinction goes to Maine. Florida is fifth oldest, behind West Virginia and New Hampshire.) With the leading edge of the Baby Boomers now 67 years old, Social Security is now a reality to more and more Vermonters.

The numbers bear this out. In 2011, the most recent year for which we have data, more than 86,000 Vermonters received Social Security retirement benefits—a number that has grown by 21 percent over the past six years. The average Vermont retiree receives a monthly Social Security check of only $1,138, well below what anyone would call a comfortable retirement income. Yet if retired Vermonters are like retirees nationally, one-third of them receive more than 90 percent of their retirement income from Social Security.

Retirees are not the only Vermonters receiving Social Security benefits. One-in-five former workers receiving Social Security checks get them because they are disabled, not retired. The number of disabled workers receiving Social Security benefits has grown by 35 percent since 2005, a much faster growth rate than the number of Social Security retirees.

The rapid growth in the number of disabled people is a national trend as well and is not an indication of increased workplace injuries. The workplace is actually much safer today than it was in the past. Most claims for disability are based on either back injuries or mental disorders — both very hard to verify. The increase in the number of disabled Vermonters is likely due to the Great Recession. When a laid off worker can’t easily find a job and exhausts unemployment benefits, claiming a hard-to-verify disability may be a last resort.

Both groups—retirees and disabled workers—have grown rapidly since the onset of the Great Recession. More people in their early 60s are taking early retirement, which means a smaller Social Security check than if they had waited until they were 66 or older. And more laid-off workers in their 50s are taking disability. They won’t be easily integrated into the labor force once the job market improves. That’s bad for them, and for the state economy as a whole.

Art Woolf is associate professor of economics at University of Vermont and editor of The Vermont Economy Newsletter.